Dive Brief:

• London-based fintech GoCardless — which lets businesses set up recurring bank payments from customers online rather than relying on debit and credit cards — is launching in the U.S. and opening a San Francisco office, the company said Wednesday in a blog post.
• GoCardless raised $75 million in February from investors including Salesforce and Google parent Alphabet to fund its expansion, according to Bloomberg.
• The company serves more than 30 countries and processes $10 billion in payments per year, according to TechCrunch.

Dive Insight:

GoCardless is looking to muscle in on a global payments market that's nearing $2 trillion annually, according to McKinsey & Co. "For credit cards, there are some pretty well established global networks: Visa and Mastercard. There is no equivalent for direct debit," Pranav Sood, GoCardless's head of international expansion, told The Telegraph. "That's what we're building."

GoCardless uses Automated Clearing House (ACH) debits to fund transactions, but it's hardly the only fintech using the recurring-transaction model. It joins a marketplace with such competitors as Chargebee, Chargify, Recurly, Stripe and Zoura.

Sood said he sees GoCardless's greatest potential for growth in a business-to-business market where 42% of payments are still done using paper checks.

"When you look at the business view, we actually see the data showing that business payers want to use ACH and direct debit," he told Bank Innovation.

GoCardless charges 1% per transaction, and transactions are capped at $2.50, according to Bank Innovation. Payment card interchange fees, in comparison, run as high as 2.7%. And Visa and Mastercard in April raised the swipe fees they charge merchants, The Wall Street Journal reported.

Meanwhile, more of the world's payments — about 18% — are recurring, GoCardless said. "The way these payments are collected around the world is pretty broken," Hiroki Takeuchi, who co-founded GoCardless in 2011, told Bloomberg.

Uncertainty surrounding Brexit makes it crucial for GoCardless to grow a market in America, but the U.S.'s interweaving of state and federal regulations presents a challenge for expansion, Sood said.

"In many ways, there's not one regulatory environment, there are 50," he told The Telegraph. But, he added, "in these uncertain times in the U.K., we want to make it as easy as possible for U.K. companies to do business around the world."

Other British fintech startups have looked to broach the U.S. market in recent years, including payments company TransferWise in 2015 and challenger bank Monzo, which announced its U.S. launch in June. Monzo's chief executive, Tom Blomfield, also was a GoCardless co-founder.